Mark Mead Baillie | Jan 06, 2014 01:22AM ET
“Gold 2014: It's The New Dawn.”
Such were the words uttered by the iconic Grace Slick in kicking off Jefferson Airplane's sunrise set in singing about revolution at Woodstock in 1969. And ever-so appropriate is that phrase today as we welcome You and Gold to 2014.
Let's start with two observations that perhaps did not make your FinMedia's musings as regards Gold and the S&P 500 opening the new year.
First: With specific respect to Gold, one day does not a new year, nor its entirety make. Still, when trading for 2014 began on Thursday, Gold found itself up better than 49 points from its New Year's Eve low, and indeed at week's end by as many as 58 points in settling at 1237 for its best weekly gain since Halloween. To be sure, we remain firm that "change is an illusion" whereas "price is the truth" and therefore any pricing in the 1200s-to-1500s is still lowly indeed, especially given the Fed's creating Dollars at a pace of better than $3.5 billion per workday. But all great liquid markets generally consolidate price -- as Gold has been doing -- before starting to rise from somewhere, which I have to believe is here.
Second: With specific respect to the S&P 500, in closing out last week's final missive for 2013 we presented some rather stark rationale for a stock market crash. And you know the old Wall Street saw on this one: "as goes opening day, so goes opening week, so goes January and thus so goes the year." On Thursday the S&P saw its initial trading day of the year close down for the first time since -- dare it be said -- 2008, that torrid year eventually having printed a low better than 49% down from 2007's closing level. Fast-forward to 2014 and the S&P has begun with its seventh-worst opening day percentage loss in the last 35 years. I know, -1% seems trivial given the S&P's having risen 28% last year ... but "as goes, so goes"? On verra mes amis.
In any event, through the changing of the calendar year, (albeit with just two of 252 annual trading days now in the books), we clearly see here 'tis Gold that is getting the bid, whilst 'tis the equities of the S&P being rid:
As for the yellow metal's own year-over-year performance, here we've the yearly time frame depicting Gold by its Weekly Bars and the ongoing containment of the parabolic Short trend as its red dots continue to descend. However: throughout this now 13-week run of Short trend, Gold's current price of 1237 is the closest settle yet (55 points) to that level necessary (1292) to flip the dots to Long and blue in the ensuing week. To that perhaps improbable end, 'tis worth noting that Gold's weekly weighted-average trading range is currently running at 52 points, so achieving 1292 ought not be an unreasonable expectation should price be pushed higher for a third consecutive week:
"But mmb, you've no concern that Big Ben said yesterday the economy is strengthening? Isn't that bad for Gold?"
No.
Oh, you're waiting for some elaboration? An economy rising on substantive, real growth is one thing; an economy rising on "bent" data studies, (such as job "creation" being overwhelmingly part-time), and the noted fluffy support of a Fed churning out that aforementioned $3.5 billion per workday is quite another thing. Gold ought be flying under this scenario. And perhaps, 'tis just starting to finally so do, as once again we give due to this aberrative view by which so many have bid their Gold adieu. Aberrative indeed, for broadly across the last 12 years, Gold to me still appears in an uptrend, and certainly so should this consolidation firmly hold and the 300-day moving average soon be regained:
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